The Effects of Exploration, Exploitation, and Ambidexterity on Software Firm Performance

Abstract

The literature presents some shortcomings in the use of current skills, resources, and capabilities (exploitation) with the exploration of new competencies to achieve performance. Little is known about how the dimensions of exploitation and exploration should be analyzed; whether separately, by continuum, in sequence, through interactive or (in) congruence. Given the lack of empirical evidence of how these two dimensions can elucidate performance, the problem that arises is: How can the ambidextrous congruence boost performance? The purpose of the paper was to examine how the congruence between dualities affects organizational performance. Through a survey of 227 software companies, we tested hypotheses related to the congruence and interaction of the two ambidextrous factors. The results showed that (a) the dimensions of exploration and exploitation, average ambidexterity, and ambidexterity by means of a continuum explain the performance; (b) exploitation vs. exploration interaction is not related to the organization's result; and (c) the convergence of both dimensions increases the organizational result. The findings are consistent with the thesis of Gibson and Birkinshaw (2004) and reject the thesis of Gupta, Smith and Shalley (2006) and Cao, Gedajlovic and Zhang (2009).

Keywords:
ambidexterity; exploration; exploitation; performance; capabilities